The Consequences of Procrastination

The first shipment of LNG left US shores in late February, five years after getting construction approval from DOE. In the two years after that permit was issued, 20 other applications were made to DOE. And, that is when the approval process began to move with the speed of a glacier.

In 2013, a report by the American Council on Capital Formation (ACCF) issued a report that compiled the status of LNG export applications and the economic benefits associated with them. It cited a study by ICF International that increased LNG exports could increase employment by several hundred thousand in the ensuing 20 years and add up to $74 billion to GDP over that same period. ACCF stressed that expeditious review and approval should be a priority since 63 other export facilities were planned or under construction around the globe.

DOE’s response was continued procrastination, a skill at which bureaucrats excel. Last year, the House of Representatives passed legislation to expedite the approval process to counter DOE’s continued slow walking. In the meantime, global competitors are not standing still. Australia plans to bring six new facilities on line by 2020, which will give it a competitive advantage in Asian markets. These delays by DOE also mean that Europe has had to continue to rely heavily on Russian natural gas exports. Geographic and commercial considerations make reliance on Russian gas a reality for the foreseeable future, the level of dependence could have been reduced. Instead, the Nord Stream pipeline project to increase Russian supplies to Europe has been expanded.

If US projects had been approved in a more timely manner, more gas from the US would be used in Europe. In the short run this would put competitive pressure on Gazprom. It would also have improved trade and overall relations with European nations. A 2014 study by Columbia University’s Center on Global Energy Policy reached two important conclusions: “By the end of the decade, US exports will help further loosen the LNG market to the benefit of European consumers and the detriment of Russian producers” and “Over time, however, US LNG can help Europe minimize the amount of leverage Russia gains from selling gas to Europe, as part of a broader European energy security policy agenda”.

The failure to think strategically about LNG exports has not only harmed the US economically but has further eroded our relations with our European and Asian allies, raising critical economic and security questions about our reliability. The unintended consequences of this ideological procrastination are serious and contrary to our role as a global leader.